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  • Compund Interest Test

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    Ted Cuthbertson
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    Johnny invests $18,000 at 5% annual interest compounded yearly, earning $60,954.40 total and $42,954.40 interest after 25 years. Ben invests the same amount at the same rate but compounded monthly, earning $62,663.20 total and $44,663.20 interest after 25 years. Both used the compound interest formula to calculate total amounts and interest earned over 25 years, with Ben earning more due to his monthly compounding versus Johnny's yearly compounding.

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    Johnny invests $18,000 at 5% annual interest compounded yearly, earning $60,954.40 total and $42,954.40 interest after 25 years. Ben invests the same amount at the same rate but compounded monthly, earning $62,663.20 total and $44,663.20 interest after 25 years. Both used the compound interest formula to calculate total amounts and interest earned over 25 years, with Ben earning more due to his monthly compounding versus Johnny's yearly compounding.

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    6 views2 pages

    Compund Interest Test

    Uploaded by

    Ted Cuthbertson
    Johnny invests $18,000 at 5% annual interest compounded yearly, earning $60,954.40 total and $42,954.40 interest after 25 years. Ben invests the same amount at the same rate but compounded monthly, earning $62,663.20 total and $44,663.20 interest after 25 years. Both used the compound interest formula to calculate total amounts and interest earned over 25 years, with Ben earning more due to his monthly compounding versus Johnny's yearly compounding.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 2

    Name ________________________________

    Compound Interest
    Question 1:
    Johnny invests $18,000 for 25 years at an interest rate of 5%p.a.
    compounding each year.
    Use the formula A=P (1+i)n to calculate
    1.The total amount he will have at the end of 25 years
    Show calculations
    18000(1+0.05)25 = 18000 * 1.0525
    18000 * 1.0525 = 18000 * 3.38635
    18000 * 3.38635 = $60954.4

    Answer $60,954.40

    2.The interest earned after 25 years.


    60954.4 – 18000 = $42954.4

    Answer $42,954.40

    PLEASE TURN OVER


    Question 2:
    Ben invests $18,000 for 25 years at an interest rate of 5%p.a.
    compounding monthly.
    Use the formula A=P (1+i/q)n.q to calculate
    1.The total amount he will have at the end of 25 years
    Show calculations
    18000(1+0.05/12)25*12 = 18000(1+0.004167)300
    18000(1+0.004167)300 = 18000 * 1.004167300
    18000 * 1.004167300 = 18000 * 3.48129
    18000 * 3.48129 = $62663.2

    Answer $62,663.20

    2.The interest earned after 25 years.


    62663.2 – 18000 = $44663.2

    Answer $44,663.20

    END OF TASK

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